Although I am typically against government intervention in free markets, I could favor a bailout package if the legislation actually fixed the problems that caused our current housing and banking crisis.
The government needs to pass good regulation rather than bad regulation. The community reinvestment act was part of what led to this housing bubble. The government forced banks to lend to unqualified low income people, and minorities.
Historically, home ownership had been steady around 64% from 1950 until the 1990's.
Home ownership was up from 64% to 69% from 1995-2005....The same time frame that Clinton expanded the Community Reinvestment Act and Bush went on his push for minority home ownership. But the CRA helps EVERYONE right? Even the poor white people, right? So they should have seen an equal boom from the housing market going up.
Well, not exactly:
Race change in home ownership since '94
White +8.28%
Asian American +17.15%
Native American +12.57%
African American +13.59%
Hispanic or Latino +20.14%
That said, I don't blame minorities for this, I blame the government officials who are more interested in getting campaign payoffs than doing things right. There are plenty of those in both parties.
If they wanted to increase low income home ownership it should have been done the right way, by making more blue collar jobs available along with better educational opportunities.
So what should we do?
If it were up to me I would:
Freeze foreclosures for six months. Keep people in their houses. This provides many benefits. Banks aren't stuck with depreciating assets on their books, people will maintain their homes instead of being thrown out on their butts, and it provides some stability.
Force banks to open up their balance sheets to one another. Banks aren't lending to one another because they're scared of what kind of garbage the other guy might have hidden on his balance sheet. This means the "Off balance sheet" type stuff needs to be brought into the daylight for everyone to see. The credit default swap market needs some sunlight and deregulation as well.
The federal government buying bad mortgages might not be a bad idea. They shouldn't have to buy them at their former market price though. Something like 75% would be fair.
Banks should be forced to use that cash to re-leverage themselves.
Paulson should be forced to step down. The conflict of interest he has is rather large.
Banks should not be allowed to wrap up and resell mortgages.
Consider a means tested bailout of consumers. By that I mean, if someone is too poor to every pay a mortgage, or too rich to need help, don't consider them. For the others, force banks to renegotiate mortgages with these people. Perhaps a direct refund check could be used to help these people as well.
I don't like the idea of helping people who made a mistake, but if we're going to have a bailout, I'd rather the money go to the middle/lower class people who are having trouble with mortgage payments than the banks who were part of this problem in the first place.
If the problem really is the US mortgage market, we could fix it pretty easily, much cheaper than handing a blank check to Paulson.
Long term stuff I'd do for the economy:
Repeal the Community Reinvestment Act, and the other 'Affirmative Action" housing programs. Require 10% down (at least) to buy a house.
Cut military commitments overseas. Make it known that we'll use the "Vir War Doctrine" from now on, which states:
"We're not going to invade you. We are no longer the policemen of the world. If your country attacks us, we'll simply drop large bombs on you until all your people are dead."
Make "Affirmative Action" programs for school based on family income rather than race.
Put a tax on exports. Other countries are cheating the "Free Trade" agreements by doing this, so why shouldn't we?
Start a national program to make blue collar jobs available to American workers again. Punish companies that produce overseas rather than at home. If need be, use a tariff. It is time America started making things again, instead of buying things from foreigners on credit.
Finally, many of the politicians pushing a bailout bill are bankrolled by the financial institutions. other politicians pushed the opinion that there were 'no problems' at Fannie Mae and Freddie Mac in 2004 when others were asking for stricter regulations.
When is America going to wake up to all of this? Will people have to lose everything to start caring about how their government is run?
Tuesday, September 30, 2008
Thursday, September 25, 2008
Tinfoil Thursday: Prepare for Martial Law!
The president was on television last night, informing the people who don't pay attention that their banks could fail. Fortunately the market is up today, but I'm sure the president succeeded in scaring the "average" people enough that a large down day in the markets will scare the shit out of people.
I was surprised Bush went on the air and mentioned the possibility of more bank failures. While I realize he wanted the "No Banker Left Behind" bailout to go through, he might have cause more harm by waking up the masses to how big our economic problems are.
The people who don't pay attention who scare me, because they are the ones most likely to panic and cause a bank run, or food shortage. They are also easily spooked by stupid things (IE if the Dow dropped by 500 today) rather than stuff that should ring the alarm bells (HELLO, FANNIE AND FREDDIE WERE NATIONALIZED).
Stupid people are typicaly just an annoyance, but stupid people in a panic are downright dangerous. I hope this doesn't sound elitist, because that isn't my intention. It's simply that uninformed and scared is a bad combination to have, especially in large numbers.
Which brings me to the topic for the first edition of Tinfoil Thursday: Martial Law!
The US military is starting domestic tours of duty soon, to act
Well there is nothing wrong with that right? We can have our soldiers helping us out if there is some 'man made emergency" or whatever the fuck they said.
I suppose one setback to this operation would be that domestic military operations are prohibited by the constitution. From Wikipedia:
Maybe someone should send them an email or something? Oh wait, the constiution doesn't matter anymore on this issue because of Executive Directive 51. From wikipedia:
So what do you guys think, is having our military here to perform police duties an evil plot to overthrow our Republic, or just a response to chaos that occured during Katrina?
I was surprised Bush went on the air and mentioned the possibility of more bank failures. While I realize he wanted the "No Banker Left Behind" bailout to go through, he might have cause more harm by waking up the masses to how big our economic problems are.
The people who don't pay attention who scare me, because they are the ones most likely to panic and cause a bank run, or food shortage. They are also easily spooked by stupid things (IE if the Dow dropped by 500 today) rather than stuff that should ring the alarm bells (HELLO, FANNIE AND FREDDIE WERE NATIONALIZED).
Stupid people are typicaly just an annoyance, but stupid people in a panic are downright dangerous. I hope this doesn't sound elitist, because that isn't my intention. It's simply that uninformed and scared is a bad combination to have, especially in large numbers.
Which brings me to the topic for the first edition of Tinfoil Thursday: Martial Law!
The US military is starting domestic tours of duty soon, to act
as an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks
Well there is nothing wrong with that right? We can have our soldiers helping us out if there is some 'man made emergency" or whatever the fuck they said.
I suppose one setback to this operation would be that domestic military operations are prohibited by the constitution. From Wikipedia:
The Posse Comitatus Act is a United States federal law (18 U.S.C. § 1385) passed on June 16, 1878 after the end of Reconstruction. The Act prohibits most members of the federal uniformed services (the Army, Air Force, and State National Guard forces when such are called into federal service) from exercising nominally state law enforcement police or peace officer powers that maintain "law and order" on non-federal property (states, their counties and municipal divisions) in the former Confederate states.
The statute generally prohibits federal military personnel and units of the United States National Guard under federal authority from acting in a law enforcement capacity within the United States, except where expressly authorized by the Constitution or Congress. The Coast Guard is exempt from the Posse Comitatus Act.
The Posse Comitatus Act and the Insurrection Act substantially limit the powers of the federal government to use the military for law enforcement.
Maybe someone should send them an email or something? Oh wait, the constiution doesn't matter anymore on this issue because of Executive Directive 51. From wikipedia:
The National Security and Homeland Security Presidential Directive (National Security Presidential Directive NSPD-51/Homeland Security Presidential Directive HSPD-20, sometimes called simply "Executive Directive 51" for short), signed by United States President George W. Bush on May 4, 2007, is a Presidential Directive which specifies the procedures for continuity of the federal government in the event of a "catastrophic emergency". Such an emergency is construed as "any incident, regardless of location, that results in extraordinary levels of mass casualties, damage, or disruption severely affecting the U.S. population, infrastructure, environment, economy, or government functions." [1]
The unclassified portion of the directive was posted on the White House website on May 9, 2007, without any further announcement or press briefings,[2] although Special Assistant to George W. Bush Gordon Johndroe answered several questions on the matter when asked about it by members of the press in early June 2007
So what do you guys think, is having our military here to perform police duties an evil plot to overthrow our Republic, or just a response to chaos that occured during Katrina?
Sunday, September 21, 2008
The "No Banker Left Behind" Act of 2008
As soon as tomorrow, congress could vote on emergency action to rescue the investment banks from the bad mortgages they committed to.
For the sake of argument, we'll call the legislation the "No Banker Left Behind" act.
What the media and government are telling us is "this bill must be passed to avoid an economic catastrophe."
The calls for swift action are led by Treasury secretary Hank Paulson, who also happens to be the former CEO of Goldman Sachs.
Well, avoiding another depression sounds like a good deal for the taxpayer, right?
The governments plan is to allow the secretary of the treasury to buy these bad mortgages from banks, which would make the banks and markets more stable.
The government would then be on the hook for these mortgages, which means in the end that YOU the taxpayer will be on the hook for the mistakes of the bad lenders and defaulting borrowers.
You can find the full text of the proposed legislation here.
The media is calling this a 700 billion dollar bailout. I would say it's safe to assume the total cost will easily eclipse one trillion dollars.
So lets take some time to look at this legislation the government is rushing to pass.
Notice that "protecting the taxpayer" comes after providing stability for the bankers. At least they were honest with the order of the list. With this legislation Paulson will have the power to buy back whatever he wants from banks, and to nationalize or force banks to do whatever he sees fit to 'fix the problem'.
This is the de-facto nationalization of the banking and insurance industry.
The part about only buying mortgages from institutions headquartered in the US is worth noting. Would this prevent China (Who Paulson has close ties with) from selling a bad mortgage back to Goldman Sachs for 60 cents on the dollar, and then the US government buying it from Goldman at 70 and sticking the taxpayer with the bill?
In addition, Paulson later talked about expanding the program so US taxpayers bail out foreigners without the tinfoil laundering scheme I mentioned above.
Notice that this isn't the total amount they can ever have, it's just the amount that can be on the books at one time. So it sounds as if they were to buy a mortgage at $300,000 from Goldman Sachs, they could then turn around and sell it elsewhere for $200,000. The taxpayers basically foot the bill for the loss, and then there is more room to buy more assets.
The worst part is section 8:
There is no oversight.
Paulson would be untouchable by the law.
So what do the presidential candidates think about this legislation?
John McCain has not come out against this legislation. In fact, he supports the idea of bailing out the bankers. I suppose it shouldn't be a suprise when you look at the top 10 companies his donations have come from. (Credit: OpenSecrets.org)
Merrill Lynch $298,413
Citigroup Inc $269,251
Morgan Stanley $233,272
Goldman Sachs $208,395
JPMorgan Chase & Co $179,975
AT&T Inc $174,487
Blank Rome LLP $150,426
Credit Suisse Group $150,025
Greenberg Traurig LLP $146,787
UBS AG $140,165
Surely, Barack Obama must be against this! After all, he's the candidate of Change™!
Actually Obama has come out in favor of bailing out the banks. A look at his top 10 campaign contribution list might shed some light on his position.
Goldman Sachs $691,930
University of California $611,207
Citigroup Inc $448,599
JPMorgan Chase & Co $442,919
Harvard University $435,769
Google Inc $420,174
UBS AG $404,750
National Amusements Inc $389,140
Microsoft Corp $377,235
Lehman Brothers $370,524
SHIT! It can't really be that simple can it? Does the banking industry give enough in political donations, and simply have so many lobbyists that they can get candidates to agree to have taxpayers bail them out in an election year?
Probably.
In addition I'll note that John McCain has Phil Gramm on his campaign, who basically allowed banking lobbyists to write the Gramm Leach Bliley Act which was part of the cause of this crap.
And Obama, his VP vetting team was headed up by the former Chairman of Fannie Mae, Jim Johnson...who had to resign in disgrace after getting a sweetheart loans for himself and friends.
The banking industry fought tooth and nail to get that law passed in 1999 to allow them to leverage themselves (hold less money) more than was previously allowable by law.
Making money by giving out mortgages isn't hard. You require 20% down, and then you charge interest. The problem is the bankers wanted more. They wanted to be able to then package mortgages up and sell them to other people. They wanted to be able to invest and leverage themselves in 'exotic' ways to maximize profit.
So they hired some lobbyists, and with enough time, effort, and distraction they got what they wanted.
Now that they've leeched their millions off the backs of the uninformed people, they once again want more. The bloodsuckers have not yet had their fill.
They don't want to pay the piper. They don't want to pay for their mistakes. They don't want to face the ultimate regulators in capitalism: Bankruptcy and failure.
Additionally, there is no guarantee this will work.
Taxpayers taking on this kind of potential debt may temporarily settle the financial markets, and make the investment bankers happy....
Or it could dampen the desire of foreigners to invest in the dollar, as the US approaches insolvency and threatens to repudiate its debts.
Or we could just end up with a deflationary depression anyway. We've seen amazing wealth destruction in the past few months, and we've had the telltale signs of deflation...the monster that feeds upon wealth destruction to become stronger...and destroy more wealth.
I don't know what is worse, the situation America is in, the media's reporting of it, or the fact that nobody is really paying attention.
Doesn't anyone ever stop and ask themselves, why doesn't the democrat Obama, the champion of the "people" propose that we bailout the actual homeowners rather than the billionaire bankers?
Doesn't anyone ever stop and ask themselves, why doesn't the republican McCain, the champion of free market capitalism propose that we let these banks fail, and suffer the hard consequences of economic downturn rather than socialize our banking and insurance industries at the expense of the taxpayer?
Nobody ever wonders these things, because the media never bothers to ask. People don't have the time to dig for the truth, or even at least read the proposed legislation and come to their own conclusions.
Our fellow citizens, with their chronic inattentiveness have turned our democracy into an idiocracy.
It's a pure farce, I feel as if I'm watching a bad movie.
Both candidates are in bed with the banking industry that wrote the 1999 law that caused this mess. Now they're going to get the taxpayers to bail them out! And the media for the most part is silent, other than to tell us about how BAD things could turn out if action is not taken.
It's a legislative gang rape. The collective citizens are the rape victim, with the bankers and politicians perpetrating the rape. The media stands on the sidelines recording it for prosperity, while they remind us it's for our own good so we should enjoy it.
So once the democrats are appeased with something they can champion during the election, look for this legislation to pass. If it goes through congress, the only comfort I will have will be when I read the vote count which will likely be:
434 to 1.
For the sake of argument, we'll call the legislation the "No Banker Left Behind" act.
What the media and government are telling us is "this bill must be passed to avoid an economic catastrophe."
The calls for swift action are led by Treasury secretary Hank Paulson, who also happens to be the former CEO of Goldman Sachs.
Well, avoiding another depression sounds like a good deal for the taxpayer, right?
The governments plan is to allow the secretary of the treasury to buy these bad mortgages from banks, which would make the banks and markets more stable.
The government would then be on the hook for these mortgages, which means in the end that YOU the taxpayer will be on the hook for the mistakes of the bad lenders and defaulting borrowers.
You can find the full text of the proposed legislation here.
The media is calling this a 700 billion dollar bailout. I would say it's safe to assume the total cost will easily eclipse one trillion dollars.
So lets take some time to look at this legislation the government is rushing to pass.
Sec. 2. Purchases of Mortgage-Related Assets.
(a) Authority to Purchase.—The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.
(b) Necessary Actions.—The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:
(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;
(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;
(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;
(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and
(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.
Sec. 3. Considerations.
In exercising the authorities granted in this Act, the Secretary shall take into consideration means for—
(1) providing stability or preventing disruption to the financial markets or banking system; and
(2) protecting the taxpayer.
Notice that "protecting the taxpayer" comes after providing stability for the bankers. At least they were honest with the order of the list. With this legislation Paulson will have the power to buy back whatever he wants from banks, and to nationalize or force banks to do whatever he sees fit to 'fix the problem'.
This is the de-facto nationalization of the banking and insurance industry.
The part about only buying mortgages from institutions headquartered in the US is worth noting. Would this prevent China (Who Paulson has close ties with) from selling a bad mortgage back to Goldman Sachs for 60 cents on the dollar, and then the US government buying it from Goldman at 70 and sticking the taxpayer with the bill?
In addition, Paulson later talked about expanding the program so US taxpayers bail out foreigners without the tinfoil laundering scheme I mentioned above.
Sec. 6. Maximum Amount of Authorized Purchases.
The Secretarys authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time
Notice that this isn't the total amount they can ever have, it's just the amount that can be on the books at one time. So it sounds as if they were to buy a mortgage at $300,000 from Goldman Sachs, they could then turn around and sell it elsewhere for $200,000. The taxpayers basically foot the bill for the loss, and then there is more room to buy more assets.
The worst part is section 8:
Sec. 8. Review.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
There is no oversight.
Paulson would be untouchable by the law.
So what do the presidential candidates think about this legislation?
John McCain has not come out against this legislation. In fact, he supports the idea of bailing out the bankers. I suppose it shouldn't be a suprise when you look at the top 10 companies his donations have come from. (Credit: OpenSecrets.org)
Merrill Lynch $298,413
Citigroup Inc $269,251
Morgan Stanley $233,272
Goldman Sachs $208,395
JPMorgan Chase & Co $179,975
AT&T Inc $174,487
Blank Rome LLP $150,426
Credit Suisse Group $150,025
Greenberg Traurig LLP $146,787
UBS AG $140,165
Surely, Barack Obama must be against this! After all, he's the candidate of Change™!
Actually Obama has come out in favor of bailing out the banks. A look at his top 10 campaign contribution list might shed some light on his position.
Goldman Sachs $691,930
University of California $611,207
Citigroup Inc $448,599
JPMorgan Chase & Co $442,919
Harvard University $435,769
Google Inc $420,174
UBS AG $404,750
National Amusements Inc $389,140
Microsoft Corp $377,235
Lehman Brothers $370,524
SHIT! It can't really be that simple can it? Does the banking industry give enough in political donations, and simply have so many lobbyists that they can get candidates to agree to have taxpayers bail them out in an election year?
Probably.
In addition I'll note that John McCain has Phil Gramm on his campaign, who basically allowed banking lobbyists to write the Gramm Leach Bliley Act which was part of the cause of this crap.
And Obama, his VP vetting team was headed up by the former Chairman of Fannie Mae, Jim Johnson...who had to resign in disgrace after getting a sweetheart loans for himself and friends.
The banking industry fought tooth and nail to get that law passed in 1999 to allow them to leverage themselves (hold less money) more than was previously allowable by law.
Making money by giving out mortgages isn't hard. You require 20% down, and then you charge interest. The problem is the bankers wanted more. They wanted to be able to then package mortgages up and sell them to other people. They wanted to be able to invest and leverage themselves in 'exotic' ways to maximize profit.
So they hired some lobbyists, and with enough time, effort, and distraction they got what they wanted.
Now that they've leeched their millions off the backs of the uninformed people, they once again want more. The bloodsuckers have not yet had their fill.
They don't want to pay the piper. They don't want to pay for their mistakes. They don't want to face the ultimate regulators in capitalism: Bankruptcy and failure.
Additionally, there is no guarantee this will work.
Taxpayers taking on this kind of potential debt may temporarily settle the financial markets, and make the investment bankers happy....
Or it could dampen the desire of foreigners to invest in the dollar, as the US approaches insolvency and threatens to repudiate its debts.
Or we could just end up with a deflationary depression anyway. We've seen amazing wealth destruction in the past few months, and we've had the telltale signs of deflation...the monster that feeds upon wealth destruction to become stronger...and destroy more wealth.
I don't know what is worse, the situation America is in, the media's reporting of it, or the fact that nobody is really paying attention.
Doesn't anyone ever stop and ask themselves, why doesn't the democrat Obama, the champion of the "people" propose that we bailout the actual homeowners rather than the billionaire bankers?
Doesn't anyone ever stop and ask themselves, why doesn't the republican McCain, the champion of free market capitalism propose that we let these banks fail, and suffer the hard consequences of economic downturn rather than socialize our banking and insurance industries at the expense of the taxpayer?
Nobody ever wonders these things, because the media never bothers to ask. People don't have the time to dig for the truth, or even at least read the proposed legislation and come to their own conclusions.
Our fellow citizens, with their chronic inattentiveness have turned our democracy into an idiocracy.
It's a pure farce, I feel as if I'm watching a bad movie.
Both candidates are in bed with the banking industry that wrote the 1999 law that caused this mess. Now they're going to get the taxpayers to bail them out! And the media for the most part is silent, other than to tell us about how BAD things could turn out if action is not taken.
It's a legislative gang rape. The collective citizens are the rape victim, with the bankers and politicians perpetrating the rape. The media stands on the sidelines recording it for prosperity, while they remind us it's for our own good so we should enjoy it.
So once the democrats are appeased with something they can champion during the election, look for this legislation to pass. If it goes through congress, the only comfort I will have will be when I read the vote count which will likely be:
434 to 1.
Friday, September 19, 2008
Chaos On Wall Street, Mayhem Coming To Main Street?
I wrote my first article on gameriot about the economy back in June. At the end, I mentioned all of the bad paper floating around, and it looks like it finally come back to bite us in the butt this week.
So what exactly motivated the large downturn earlier this week? A few things, in order by time frame.
1. The Community Reinvestment Act - Started by Carter, and expanded by Clinton this was designed to increase minority home ownership. You see back in the 70's and 80's banks wouldn't make loans to people who couldn't repay them. These banks were accused of racism because often the people they wouldn't make loans to were disproportionally minority groups. So the federal government got involved and forced banks some banks to make the loans, and let others know that 'Discriminatory practices in lending will be punished.'.
2. The natural outcome of the socialism in item 1 led to banks making loans to people who couldn't afford them. After all, it's better to have a bad loan on the books than having the federal government coming to audit you, and Reverend al coming to picket you. So companies went above and beyond to make loans to people who shouldn't get them. Some intelligent people in the banking business even reasoned that real estate "always goes up" so things should work out for the best.
3. Some smart people at the banks realized this whole idea probably sucks. They rolled up home mortgage loans, and resold them to other banks. The ratings agencies that should police this sort of thing, overvalued the mortgages that were sold. this led to investment banks buying up mortgages from traditional lending institutions with the impression they were solid investments.
4. In 1999 Clinton repealed the Glass-Stegal act, which contained important safeguards to keep banking institutions solvent. Replacing Glass-Stegal was a bill written by banking lobbyists, pushed through by Republicans in congress.
5. Interest rates were kept artificially low throughout the Clinton and Bush years by Alan Greenspan, which made lending easier for the banks.
6. President Bush tried to reform Fannie and Freddie a few years back, but was shot down by the democrats. In typical "What me worry?" fashion, he resumed paying attention to his crusades in the middle east rather than pushing the issue domestically.
7. Banks got very wacky in the past few years during the housing bubble. Since the CRA stuff went so well, they decided that housing would never ever go bad, and basically gave loans to anyone who could fog a mirror.
8. Housing prices declined, first hurting the Subprime market, and now the regular housing market. People are stuck in situations where they have no equity in their home, and have loans larger than the value of the house. This makes defaulting an attractive option.
9. Investment Banks started realizing all these bundled mortgages they have aren't worth what they should be. Some might be worth pennies on the dollar. Once that shit started hitting the fan a few months ago, people started selling the stocks of the investment banks, leading some of them to insolvency.
So those are the basic things that led to this mess. I probably missed a few details, but whatever. Both the Republicans and Democrats are blaming each other for this mess, but it's really the fault of both parties.
So why is the market rebounding? Well, the fed decided to ban short selling, and is considering the creation of a government trust to buy all the bad mortgages from the banks, to try to work out deals with the owners to keep them in their houses.
Put very simply, we had one socialist program designed to get poor people into housing. That program dragged the economy down, so now the government is going to socialize the losses onto the taxpayer, and replace the program with outright socialism. The government will basically become the mortgage lender for these people who shouldn't have had mortgages in the first place.
Since the government doesn't want to own a bunch of shitty real estate, odds are the people having problems will get sweetheart deals to keep them in their houses.
People who actually behaved responsibly will get stuck with the tax bill.
While many people are blaming capitalism for this debacle, it's clearly the results of government interference in private markets. The banking system should work pretty easily. Banks make loans. If said loans aren't paid back, then the consumer defaults and the bank gets whatever collateral there was. If the bank makes too many bad loans and goes under, then fuck it, it goes under. That is capitalism.
Telling banks they must lend to those that are unqualified, then bailing out certain banks while letting others fail is not capitalism. It is socialism mixed with a tinge of corporatism and a shitload of stupidity.
In the government's mad dash to fix these problems in an election year, they've socialize (ie taken over) the largest insurance company in America, along with the two biggest mortgage lenders. The government is now on the hook for these companies if they fail, possibly to the tune of trillions of dollars.
As our government falls further and further in debt, the US dollar looks less attractive to foreign countries. When it gets to the point that foreign countries will no longer invest here because the US government is basically insolvent, then the party ends.
At some point America has to wake up and realize that everyone can't have everything. As a society we can guarantee equality of opportunity, but not equality of result. At some point, we need our politicians to become serious people, rather than pie in the sky socialists trying to create utopia.
EDIT: A short addendum: If the actions taken today (the govt buying the bad paper from the banks and the ban on shorts) do not "work", you're likely seeing the start of another Great Depression.
This was running a bit long for a blog entry, and I didn't even get into the Credit Default swaps, who Hank Paulson worked for before, or all the sweet conspiracy theories about Hedge funds and SWF's killing companies on purpose. But considering you're all from gameriot, odds are you don't read past the first four paragraphs anyway. ;)
So what exactly motivated the large downturn earlier this week? A few things, in order by time frame.
1. The Community Reinvestment Act - Started by Carter, and expanded by Clinton this was designed to increase minority home ownership. You see back in the 70's and 80's banks wouldn't make loans to people who couldn't repay them. These banks were accused of racism because often the people they wouldn't make loans to were disproportionally minority groups. So the federal government got involved and forced banks some banks to make the loans, and let others know that 'Discriminatory practices in lending will be punished.'.
2. The natural outcome of the socialism in item 1 led to banks making loans to people who couldn't afford them. After all, it's better to have a bad loan on the books than having the federal government coming to audit you, and Reverend al coming to picket you. So companies went above and beyond to make loans to people who shouldn't get them. Some intelligent people in the banking business even reasoned that real estate "always goes up" so things should work out for the best.
3. Some smart people at the banks realized this whole idea probably sucks. They rolled up home mortgage loans, and resold them to other banks. The ratings agencies that should police this sort of thing, overvalued the mortgages that were sold. this led to investment banks buying up mortgages from traditional lending institutions with the impression they were solid investments.
4. In 1999 Clinton repealed the Glass-Stegal act, which contained important safeguards to keep banking institutions solvent. Replacing Glass-Stegal was a bill written by banking lobbyists, pushed through by Republicans in congress.
5. Interest rates were kept artificially low throughout the Clinton and Bush years by Alan Greenspan, which made lending easier for the banks.
6. President Bush tried to reform Fannie and Freddie a few years back, but was shot down by the democrats. In typical "What me worry?" fashion, he resumed paying attention to his crusades in the middle east rather than pushing the issue domestically.
7. Banks got very wacky in the past few years during the housing bubble. Since the CRA stuff went so well, they decided that housing would never ever go bad, and basically gave loans to anyone who could fog a mirror.
8. Housing prices declined, first hurting the Subprime market, and now the regular housing market. People are stuck in situations where they have no equity in their home, and have loans larger than the value of the house. This makes defaulting an attractive option.
9. Investment Banks started realizing all these bundled mortgages they have aren't worth what they should be. Some might be worth pennies on the dollar. Once that shit started hitting the fan a few months ago, people started selling the stocks of the investment banks, leading some of them to insolvency.
So those are the basic things that led to this mess. I probably missed a few details, but whatever. Both the Republicans and Democrats are blaming each other for this mess, but it's really the fault of both parties.
So why is the market rebounding? Well, the fed decided to ban short selling, and is considering the creation of a government trust to buy all the bad mortgages from the banks, to try to work out deals with the owners to keep them in their houses.
Put very simply, we had one socialist program designed to get poor people into housing. That program dragged the economy down, so now the government is going to socialize the losses onto the taxpayer, and replace the program with outright socialism. The government will basically become the mortgage lender for these people who shouldn't have had mortgages in the first place.
Since the government doesn't want to own a bunch of shitty real estate, odds are the people having problems will get sweetheart deals to keep them in their houses.
People who actually behaved responsibly will get stuck with the tax bill.
While many people are blaming capitalism for this debacle, it's clearly the results of government interference in private markets. The banking system should work pretty easily. Banks make loans. If said loans aren't paid back, then the consumer defaults and the bank gets whatever collateral there was. If the bank makes too many bad loans and goes under, then fuck it, it goes under. That is capitalism.
Telling banks they must lend to those that are unqualified, then bailing out certain banks while letting others fail is not capitalism. It is socialism mixed with a tinge of corporatism and a shitload of stupidity.
In the government's mad dash to fix these problems in an election year, they've socialize (ie taken over) the largest insurance company in America, along with the two biggest mortgage lenders. The government is now on the hook for these companies if they fail, possibly to the tune of trillions of dollars.
As our government falls further and further in debt, the US dollar looks less attractive to foreign countries. When it gets to the point that foreign countries will no longer invest here because the US government is basically insolvent, then the party ends.
At some point America has to wake up and realize that everyone can't have everything. As a society we can guarantee equality of opportunity, but not equality of result. At some point, we need our politicians to become serious people, rather than pie in the sky socialists trying to create utopia.
EDIT: A short addendum: If the actions taken today (the govt buying the bad paper from the banks and the ban on shorts) do not "work", you're likely seeing the start of another Great Depression.
This was running a bit long for a blog entry, and I didn't even get into the Credit Default swaps, who Hank Paulson worked for before, or all the sweet conspiracy theories about Hedge funds and SWF's killing companies on purpose. But considering you're all from gameriot, odds are you don't read past the first four paragraphs anyway. ;)
Friday, September 12, 2008
Biden To Step Down?
A few days ago, Joe Biden said that Hitlery Clinton would be a better pick for vice president than himself. While this could be the typical Joe Biden gaffe, perhaps old Joe was floating the idea out there to see what people think? After all, if Clinton were to replace Biden, that might eliminate the Republicans monopoly over the vagina card in this election.
Wednesday, September 10, 2008
Obama Calles Sarah Palin a Pig.
At a recent press conference, Barack Hussein Osama said:
The first thing that jumps out at me is the sexism. The second thing that jumps out is that Barack must really hate Sarah Palin to call her a pig, since Muslims hate pigs.
One has to wonder about the left constantly saying Barack Obama is a great speaker. Maybe I've fallen into the trap of believing this too. He actually isn't all that good at speaking unless he's got a teleprompter and a captive audience. Any time he tries to make an "Off The Script" remark, it always starts with him saying 'UHHHHHH DUHHHHHHH" with a few "UHHHHHHHHHHHHHS" thrown inbetween, just so you know his teeny little brain is working on a response. Every so often he throws out something that is idiotic like calling Sarah Palin a pig, insulting small town folk, or praising terrorists.
So I think it's time we got rid of the 'common knowledge' assumption that Obama is a good speaker. He's good at reading a script. He's an excellent actor. He could probably earn a great deal of money with a sitcom based on his presidential campaign. I'm sure UPN is looking to add to their fall lineup.
the John McCain-Sarah Palin policies don’t represent change, they’re “just calling the same thing something different.”
“You can put lipstick on a pig, but it’s still a pig,”.
The first thing that jumps out at me is the sexism. The second thing that jumps out is that Barack must really hate Sarah Palin to call her a pig, since Muslims hate pigs.
One has to wonder about the left constantly saying Barack Obama is a great speaker. Maybe I've fallen into the trap of believing this too. He actually isn't all that good at speaking unless he's got a teleprompter and a captive audience. Any time he tries to make an "Off The Script" remark, it always starts with him saying 'UHHHHHH DUHHHHHHH" with a few "UHHHHHHHHHHHHHS" thrown inbetween, just so you know his teeny little brain is working on a response. Every so often he throws out something that is idiotic like calling Sarah Palin a pig, insulting small town folk, or praising terrorists.
So I think it's time we got rid of the 'common knowledge' assumption that Obama is a good speaker. He's good at reading a script. He's an excellent actor. He could probably earn a great deal of money with a sitcom based on his presidential campaign. I'm sure UPN is looking to add to their fall lineup.
Tuesday, September 9, 2008
The World Is Ending..Tomorrow!
For those of you that haven't heard the Large Hadron Collider will be starting up tomorrow. Here is a preview from MSNBC:
Will the Large Hadron Collider save the world, or destroy it?
As the atom-smasher at Europe's CERN research center is readied for its official startup near Geneva on Wednesday, researchers might wish that the general public was captivated by the quest for the Higgs boson, the search for supersymmetric particles and even the evidence for extra dimensions.
But if the feedback so far is any guide, the real headline-grabber is the claim that the world's most powerful particle-smasher could create microscopic black holes that some fear would gobble up the planet.
If your wondering what it would look like if a black hole gobbled up the earth, the BBC did a fun docu-drama on it:
Just make sure you come back to Hard Right tomorrow before we all die! I'll live blog the event!
Will the Large Hadron Collider save the world, or destroy it?
As the atom-smasher at Europe's CERN research center is readied for its official startup near Geneva on Wednesday, researchers might wish that the general public was captivated by the quest for the Higgs boson, the search for supersymmetric particles and even the evidence for extra dimensions.
But if the feedback so far is any guide, the real headline-grabber is the claim that the world's most powerful particle-smasher could create microscopic black holes that some fear would gobble up the planet.
If your wondering what it would look like if a black hole gobbled up the earth, the BBC did a fun docu-drama on it:
Just make sure you come back to Hard Right tomorrow before we all die! I'll live blog the event!
Sunday, September 7, 2008
Pulling Defeat From The Jaws Of Victory
A recent Gallop Poll shows John McCain leading Barack Obama by four points.
How can this be? With an incumbent Republican president that 70% of the people think is doing a bad job, how can someone from his party be ahead by four points in the polls?
Commentators attribute this to a post convention bounce. The addition of Sarah Palin is the cause of the McCain bounce some claim.
What I see is an election the democrats are botching badly. If any party can pull defeat from the jaws of electoral victory, it is the American Democratic Party.
Their first mistake was choosing Barack Obama. This was a mistake that democrats collectively made. While Obama is a great orator, he is lacking experience and his stances are far to the left of the general population..for example his support for the murder of children who survive a partial birth abortion. Obama would have made a great vice president, but at the top of the ticket he is a liability.
The Democrats second mistake was selecting Joe Biden as their vice president. This was Obama's mistake, as well as the party for not putting pressure on him to accept Hillary Clinton as his running mate. While I'm sure Obama had no desire to see Bill and Hill roaming the white house once again, ditching Hillary opened up the female flank on the Obama campaign.
The democrats third mistake is their savaging of Sarah Palin in the media. While Barack and Biden remain mostly above the fray, their surrogates in the media and the blogosphere have launched vicious attacks against the Palin family. Attacking a 17 year old girl, or saying Sarah Palin is a bad mother because her daughter got pregnant is simply not the best strategy for winning over independent voters.
So why are the democrats engaging in this failing strategy? It is because they're irate over the ideological divide between themselves and Palin. While McCain is a moderate Republican, Sarah Palin is everything liberals hate wrapped up in an attractive package. She's Pro-Life, Pro-Guns, Pro-Religion and from a small town.
You can almost feel the heat from the democrats hatred of her while they state the same talking points over and over
"She's just a Mayor from a small town!"
But this just reminds people of Obama's statement about small town people "Clinging to Guns and Religion".
"She doesn't have the experience to do the job! She's only been Governor for two years!"
But this just reminds people that Obama hasn't been in the Senate very long, let alone governor.
"She should stay home and take care of her special needs child!"
Of course, this sounds like sexism, which will not help the Democrats cause.
Sarah Palin has a 58% approval rating, which is the higher than Obama, McCain and Biden. The more the Democrats make this election about her, the higher the chance they will lose it. The way to the white house for the democrats is not bashing a 44 year old mother of five, the proper path is to simply point out how bad things have been under Bush.
All they have to do is trot out the headlines every week:
Instability in Russia/Georgia.
Fannie and Freddie Nationalized.
National Debt At Record Levels.
15 Dead From Carbomb in Iraq.
Instead of doing simple things like this, the democrats are preoccupied with Palin. As if they're going to suddenly convince the country the Republicans shouldn't win the white house because Sarah Palin's daughter got knocked up at 17.
As many of you know, I'm not a democrat. I don't like their party or their platform. However it is unhealthy for our country to have only one viable party in national politics. So kindly, if you're a democrat get your head in the game.
How can this be? With an incumbent Republican president that 70% of the people think is doing a bad job, how can someone from his party be ahead by four points in the polls?
Commentators attribute this to a post convention bounce. The addition of Sarah Palin is the cause of the McCain bounce some claim.
What I see is an election the democrats are botching badly. If any party can pull defeat from the jaws of electoral victory, it is the American Democratic Party.
Their first mistake was choosing Barack Obama. This was a mistake that democrats collectively made. While Obama is a great orator, he is lacking experience and his stances are far to the left of the general population..for example his support for the murder of children who survive a partial birth abortion. Obama would have made a great vice president, but at the top of the ticket he is a liability.
The Democrats second mistake was selecting Joe Biden as their vice president. This was Obama's mistake, as well as the party for not putting pressure on him to accept Hillary Clinton as his running mate. While I'm sure Obama had no desire to see Bill and Hill roaming the white house once again, ditching Hillary opened up the female flank on the Obama campaign.
The democrats third mistake is their savaging of Sarah Palin in the media. While Barack and Biden remain mostly above the fray, their surrogates in the media and the blogosphere have launched vicious attacks against the Palin family. Attacking a 17 year old girl, or saying Sarah Palin is a bad mother because her daughter got pregnant is simply not the best strategy for winning over independent voters.
So why are the democrats engaging in this failing strategy? It is because they're irate over the ideological divide between themselves and Palin. While McCain is a moderate Republican, Sarah Palin is everything liberals hate wrapped up in an attractive package. She's Pro-Life, Pro-Guns, Pro-Religion and from a small town.
You can almost feel the heat from the democrats hatred of her while they state the same talking points over and over
"She's just a Mayor from a small town!"
But this just reminds people of Obama's statement about small town people "Clinging to Guns and Religion".
"She doesn't have the experience to do the job! She's only been Governor for two years!"
But this just reminds people that Obama hasn't been in the Senate very long, let alone governor.
"She should stay home and take care of her special needs child!"
Of course, this sounds like sexism, which will not help the Democrats cause.
Sarah Palin has a 58% approval rating, which is the higher than Obama, McCain and Biden. The more the Democrats make this election about her, the higher the chance they will lose it. The way to the white house for the democrats is not bashing a 44 year old mother of five, the proper path is to simply point out how bad things have been under Bush.
All they have to do is trot out the headlines every week:
Instability in Russia/Georgia.
Fannie and Freddie Nationalized.
National Debt At Record Levels.
15 Dead From Carbomb in Iraq.
Instead of doing simple things like this, the democrats are preoccupied with Palin. As if they're going to suddenly convince the country the Republicans shouldn't win the white house because Sarah Palin's daughter got knocked up at 17.
As many of you know, I'm not a democrat. I don't like their party or their platform. However it is unhealthy for our country to have only one viable party in national politics. So kindly, if you're a democrat get your head in the game.
Welcome
Welcome to Hard Right!
You guys can use this as an open forum to chat while I work on my first post. Anonymous posting is on, go nuts.
-Vir
You guys can use this as an open forum to chat while I work on my first post. Anonymous posting is on, go nuts.
-Vir
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